Mail and Guardian

Business optimism may be up but serious economic and labour challenges lie ahead for South Africa, writes Phillip de Wet.

The farmworker strike resumed in the Western Cape with violent protests in the Hex River valley town of De Doorns. (David Harrison, M&G)

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In De Doorns, the tyres burned and the rocks flew – again. Outside Carletonville, at Harmony’s Kusasalethu mine, anger brewed among locked-out workers, with the threat of violence breaking out as uncertainty drags on. And both incidents showed the promise of more to come. Neither the mining industry, particularly the gold sector, nor agriculture, in the Western Cape at least, is likely to have an easy 2013 in terms of labour relations.

The impact of the trouble on each industry will be significant. More than 5 000 miners are likely to lose their jobs before the end of the first quarter of the year, and talk of reduced workforces, scaled-down operations and mechanisation on farms is again common. The wages of workers in both these sectors maintain a higher than average number of dependents, often in parts of the country here economic opportunities are scarce.

Live video: A good 2013 for SA?

Such gloomy prospects are in keeping with the latter part of 2012 when it seemed there was nothing but bad news to be had. In August, the Marikana massacre and subsequent strike contagion raised the prospect of an entire class of workers in revolt. In September, Moody’s downgraded South Africa‘s credit rating and, in October, fellow ratings agency Standard & Poor’s followed, shortly before The Economist published a front-page article declaring that “South Africa is sliding downhill“. In December, in an open letter to President Jacob Zuma, chief executives including the likes of Anglo-anointed Mark Cutifani and FirstRand’s Sizwe Nxasana warned that, “left unchecked, our country is in danger of unravelling”. The South African Chamber of Commerce and Industry’s business confidence index sank to a low point in the last quarter of 2012, a year in which the confidence metric was the lowest in 12 years.

But not two weeks into the new year, despite De Doorns and Kusasa­lethu making headlines, the sentiment appears to have swung around and there is a remarkably positive outlook in at least some parts of South African business.

The most compelling evidence is anecdotal but numbers can be found, for those so inclined, in support of it. The JSE, perhaps a more effective driver of sentiment than a metric, remains at all-time record highs, with a resulting flush of wealth for anyone with pension money in play on the markets. Business confidence, if not a willingness to invest, is ticking up. Retailers and vehicle manufacturers are expecting a decent year, if only relatively; manufacturers overall are already saying the worst is probably behind them.

What has changed? In a word, Man­gaung – and it did not even require a shift in policy. The business community in general is not enamoured of the Zuma administration but it seems to prefer a strong Jacob Zuma to a new party president beholden to whatever coalition of the disaffected that installed him – in other words, a repeat of Zuma’s first term, with a different cast of characters.

Sympathetic to business The effective end of the debate on nationalisation at Mangaung, even for the mining industry, has heartened many, as has the rather resounding defeat of the forces of economic change. The election of Cyril Ramaphosa, for some an avatar of the national development plan and for others a man who should by rights be sympathetic to business while also holding union credentials, is an important factor.

But, to a large extent, the absence of change in ANC policy points to the kind of political stability many in charge of large corporates and investments crave – even a bad government is better than an unpredictable government, and a government inching towards being business-friendly is second only to a business-friendly government.

But the ANC’s moderately anti-populist stance should be near the top of a list of structural issues that, in the long term, should more than outweigh the flush of January optimism.

By not taking demands for nationalisation seriously, the ANC is opening up space for the likes of the new Workers and Socialist Party. Those seeking economic revolution will have to look outside the broad church of the ANC and, although the new party may not necessarily be their vehicle, something of its ilk is required.

The same remains true of Cosa­tu, where the clearest illustration is the rise of the upstart Association of Mineworkers and Construction Union at the expense of the established National Union of Mineworkers, which is struggling to remain credible.

The business community and middle class may welcome that the leaders of the trade union federation have been co-opted into the ANC’s leadership and will be forced to tone down their rhetoric, but we have seen the consequences when workers lose trust in those nominally representing their interests.

Workers, on average, are in for a tough year. The global economy remains sluggish and the best hope for exporters is that the rand will remain weak, or will weaken further. Manufacturers do not expect to hire more workers, agriculture is unlikely to expand and both the gold and platinum mines will reduce their workforces, shutting down shafts or even mines.

Those who keep their jobs will have a tough time negotiating increases significantly above inflation. For once, that may be true of the public service too. Social spending will cushion the blow for those who do not keep their jobs but social grants have not been keeping up with inflation, and will not do so in the near future, and countercyclical government spending will be funded by debt even as the sources of taxable revenue shrink.

Cyril: From missing in action to everywhere

Prior to the ANC’s national conference in Mangaung last month, Cyril Ramaphosa was, as he had been for years, essentially missing in action. After leaving ANC management during the era of Nelson Mandela, he had granted interviews about his business interests sparingly. In December, his representatives said the ongoing Farlam inquiry into the Marikana massacre meant that Ramaphosa would rather not speak in public.

But in the past week, the ANC’s new deputy president was every-where. He broke his silence on Marikana in an interview with CNN, flighted on Tuesday, before again speaking about it at an ANC rally in KwaZulu-Natal. On Wednesday, he addressed businesspeople in the province. Similar events and similar high-profile speaking roles are apparently on the cards for Ramaphosa.

Several analysts and commentators had expected him to remain firmly in the background, either because of his tangential involvement in Marikana by way of mining company Lonmin or because speculation remains rife about whether he will find a role in the government executive.

NEC crème de la crème Although a higher profile could pressure the ANC into finding Ramaphosa a government role, that may be unintentional, one analyst says. “There is this perception, especially in the media, that shifting people is a purge,” said political commentator Sipho Seepe. “That’s what elections are supposed to do – to usher in new blood and new ideas. [Ramaphosa’s] job is to represent the ANC now.”

But there are suspicions that the popular Ramaphosa is being used to polish the ANC’s image and make it accessible to the black middle class and the business sector, both of which could adopt him as their favourite politician.

“With the Malemas taking centre stage for so long, there was a fear that portions of society would be alienated from the party,” said Seepe. “The ANC is trying to revise that image, to show it has some of the best minds in the country there.”

Ramaphosa told the KwaZulu-Natal rally that Zuma is surrounded by the “crème de la crème” in the ANC’s national executive committee. M&G